Period 3Q12 and 9M12 for Wilmar International Ltd
Actual vs. Expectations Wilmar’s 9M12 core net profit* of
US$766m came in within both the consensus and our expectations. It made up 74%
of the consensus’ FY12 forecast of USD1.03b and 76% of our forecast of
USD1.00b.
Dividends No dividend was announced as expected.
Key Results Highlights
QoQ, Wilmar’s 3Q12 core net profit
surged 125% to USD388m as its “Oilseeds and Grains” (OAG) division returned to
profitability. Note that the OAG division itself registered PBT of USD60m as compared
to a USD40m Loss Before Tax (LBT) incurred in 2Q12. This was caused by improved
soybean crush margin in China and the timely purchase of raw materials.
YoY, the 3Q12 core net profit declined 14% to USD388m as the
OAG division’s margin remained thin possibly due to overcapacity in China’s soybean
crushing industry. Note that the OAG division’s PBT of USD60m is still 40%
lower YoY (against 3Q11 PBT of US$100m). The lower performance was mitigated,
to a certain extent, by the higher PBT in the “Palm and Laurics” (PAL) segment
of US$181m (+6% YoY).
Outlook We believe the return of the OAG division to profitability
may be short-lived. Data from Shanghai JC Intelligence Co shows that China’s Soybean
Crush Margin has returned to negative in 4Q12. Hence, we still believe the OAG
division will be in the red for FY12E, although the loss will be likely smaller
than previously expected.
Change to Forecasts Raised PPB’s FY12E earnings by 2% to
RM700m after assuming a lower loss for Wilmar’s OAG division. FY13E earnings
maintained at RM832m.
Rating Maintain
MARKET PERFORM
Uncertainty for Wilmar’s OAG division profitability in 4Q12
should keep PPB’s share price upside limited. However, the downside is
supported by its book value of RM11.98 as of 2Q12.
Valuation Maintaining
our TP of RM14.60 based on Fwd.
PER of 20.8x on FY13E EPS of 70.2sen. Our Fwd PE of 20.8x is
based a -0.5 SD on the historical 3-year Forward PER.
Risks Worse than expected margins for the OAG and
PAL divisions.
Sustained drop in CPO prices.
Source: Kenanga
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